Reminder...

I was talking with someone on Sunday and she mentioned that a leading manufacturer in the Seattle area, freshly off a strike and trying to advert another, was requiring budget cuts across the board. Knee-jerk reaction for many companies is to freeze hiring or reduce the workforce, especially around year-end when the "numbers" aren't going to "satisfy" shareholders. There are so many disagreements to this practice of "budget control" it is amazing that big businesses still engage in it.

1) Cutting the teams can overwhelm current employees. If some are hourly rate, savings evaporate with overtime. In rare cases, "overloading" is actually making someone do work, rather than being a bump on the log. Management cuts the labor, doubles the work. Without killing the team, management must allow for projects to slip, or targets to be missed. Don't expect awesome chocolate-chip cookies when you cut the chips.

2) Cost-cutting through wages only affects payroll for the current quarter. Projects left unfinished, or finished half-donkey, can affect the future bottom line for years.

3) Hiring usually comes back in full effect on the first of the New Year. Cost of re-hiring is an added expense. Recruiting, interviewing, training, etc, all affect the bottom line in hours wasted, since it was done the previous year(s). Redundancy.

4) Employee morale is affected. Employees worry if they are going to be cut, regardless of management's reassurance. Some employees waste more time searching/interviewing for jobs on company time. Any manager who tells the team of 100 that 12 people will be gone in a week, I'll bet half of them will be on Monster within an hour.

5) Want to cut costs? Cut costs. Office supply purchases, different vendors, smarter utility management. Lean manufacturing doesn't have to apply to actually producing a tangible product. It can be applied to anything done by workers. Ramping up for expansion is highly short-term.